Sustainability reporting is finally going mainstream. The International Ethics Standards Board for Accountants (IESBA) recently announced the first comprehensive global standards that outline ethical considerations in sustainability reporting.
Aiming to combat greenwashing and foster greater trust in publicly communicated sustainability information, this new code of ethics is under consultation for the next couple of months.
A long time coming, these new standards herald a significant moment of positive change.
For assurance and accountancy professionals, they are going to have major ramifications. Currently, too many people in those professions remain focused on financial numbers.
Now they are going to have to shift their mindset and broaden their remit. They need to step back and consider the bigger concept of ‘value’ – not just financial results but also the wider social and environmental value created or diminished for customers, stakeholders and communities.
It’s time to embrace a new way of doing things to help counter the rapidly changing realities we face. As the climate crisis escalates, companies cannot continue with business-as-usual. They must undergo transformational change and upgrade their operations to help both people and the planet. And accountants have a crucial role in making that happen.
Companies are incredibly powerful, with many multi-national businesses having more influence than some countries. The reality is that we cannot meet the United Nations’ Sustainable Development Goals (SDGs) – the blueprint for a fairer, better and greener world by 2030 – without the positive force of business.
The World Benchmarking Alliance measures and incentivises corporate action to meet the SDGs, because we know it’s fundamental to the survival of humanity and the ecosystems on which we all depend. And the first step in any corporate sustainability journey is releasing trustworthy information that accurately quantifies action.
Trust is everything. As the latest Edelman Trust Barometer shows, business is the most trusted institution by individual citizens across the world to integrate innovations that can benefit people and planet.
But only when we can trust companies’ sustainability information can we hold them to account. Consumers, investors, policymakers and supply chain partners must all be able to trust corporate sustainability disclosures.
Otherwise, how can people wanting to work with businesses that align with their values choose the right partner? How can responsible investors know where to put their money? How can consumers understand which brands really are doing the right thing? And how can governments legislate to reward progress and push laggards to act faster?
Boosting trust and transparency will help to empower investors, governments, civil society, individual citizens and the companies themselves. Ultimately, it will help move us to a society that values the success of business by what it contributes to protecting people, the natural world and our climate, just as much as its bottom line.
With sustainability increasingly a vital corporate disclosure, there is more demand for an ethical and independent approach to reporting. The IESBA’s new standards should provide the engine for the mass acceleration of this trend.
In this new reporting landscape, in-house finance teams have a vital role to play, as those who put in controls and systems to ensure credibility. It is vital that they proceed with integrity and objectivity.
At the same time, auditors are facing competition in this fast-growing area. They may be the traditional assurance providers of financial information, but they are being increasingly challenged by new players keen to make sustainability their remit.
These specialist auditors are experts in changing corporate mindsets to drive positive social and environmental impacts. They’re not just about quantifying data, but also providing advice on best practice and ways forward. Accountants and auditors would benefit from adopting a similar approach, to ensure they don’t lose out.
That being said, as corporate reporting undergoes a fundamental shift, the increase in competition in the audit market can only be a good thing. An influx of smaller, more agile players will bring new ideas, drive innovation, boost market resilience, open up choice and drive up standards. It will benefit everyone.
A new age is upon us. Greenwashing is on the rise, even as we hurtle towards irreversible climate tipping points. In this context, corporate reporting is undergoing a radical upgrade. Sustainability is no longer a nice optional extra – but crucial to mitigating the worst of the climate emergency and creating a better future for everyone.
By switching the focus from ‘profit made for investors’ to ‘value created for all’, accountants now need to utilise new ways to credibly quantify and evaluate business sustainability, such as through the World Benchmarking Alliance’s insights and data.
The IESBA’s new standards will help ensure that the preparers and assurers of this sustainability information take a consistent and ethical approach – so it can be used effectively by all stakeholders.
By creating greater trust in sustainability reporting and driving action at scale, these standards will make a hugely positive difference. Now we need the accountancy and assurance professionals to seize the opportunity and embrace change.
This article is taken from the following link:
https://www.accountancydaily.co/sustainability-reporting-coming-mainstream
